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Chinese telecommunications giant Huawei - involved in a $1.35 billion Ultrafast Broadband project in New Zealand - is almost certainly a front for Chinese intelligence, a defence analyst claims.

That's the collective view of the security community in the US, Britain and Australia, according to Auckland-based defence analyst Paul Buchanan, who says it would be prudent for Prime Minister John Key to listen to them.

Dr Buchanan worked for the US Department of Defence before imigrating to New Zealand.

Huawei has been blocked from bidding for the national broadband network in Australia. In the US it is blocked by Congress in 2008 from buying networking company 3Com, and in 2010 Congress blocked them from bidding on telecommunications gear for Sprint.

"Our major security partners think these guys are up to no good. I would be very surprised if the GCSB and the SIS had not been in contact with our larger partners about the presence of Huawei in the New Zealand broadband market," Dr Buchanan told NBR.

"It could well be that concerns about these guys are about protecting market share for local businesses. But I think this is unlikely, so I tend to think their security concerns probably have a basis in fact."

Dr Buchanan believes Huawei could be intent on tapping into the top-secret Echelon intelligence network in which New Zealand exchanges highly classified information with the US, Britain, Australia and Canada.

"China has no such luxury. It has to do everything by itself and it's been lagging behind with signals intelligence and technical intelligence, and they've been playing catch-up for the last 10 years.

"But if they're going to be a great power they've got to do this. They've got to get out and get a significant signals and technical intelligence capability, and the suspicion among the Americans and the British is that Huawei is one way of doing something."

Dr Buchanan says there's no hard and fast evidence in the public domain that Huawei is up to no good. But he believes there is classified information in the hands of US intelligence agencies which would implicate the company in covert activities.

"Professional intelligence agencies do not deal in prejudice, they deal in facts. So whether they were Chinese, Indian, German or Pakistani it wouldn't matter.

"If these agencies think they are being used as a front they will say so and so it's not about being anti-Chinese."

So what is Huawei's primary objective in New Zealand if it is a front for the Chinese security services?

Paul Buchanan thinks it goes way beyond commercial considerations.

"With their global weight they can undercut the pricing structure of the whole local internet should they wish to, but in providing these platforms and being the basis for internet communications allows them indirect access to a number of things.

"If you have a government official's private broadband account on a server that is controlled by Huawei then, if people's suspicions are correct, they can tap into that.

"They can tap into government agencies, they may be using their servers or platforms, and that's what the Americans and others are concerned about.

"And let's not forget that New Zealand is particularly vulnerable to cyber espionage. This has been mentioned time and time again by the SIS.

"Within the last six weeks Murray McCully's private emails in which he had been discussing official business were hacked into and leaked to the press by people with an axe to grind.

"These people were not professional intelligence collectors with hundreds of hackers working right round the day to penetrate security systems of government agencies.

"They were just disgruntled folks, and that shows you the looseness of internet security protocols in this country - that a government minister can have his private emails hacked into by amateurs."

Dr Buchanan says New Zealand must stop thinking of itself as too insignificant and too remote for any major player to take a keen interest in it.

"I think that's a bit short sighted because we're part of a much bigger play as the south Pacific is becoming an arena for future competition and whether we like it or not we're being thrust into this fray."

All of which raises a fundamental question.

If Huawei is a wolf in sheep's clothing, did New Zealand do enough due diligence on it before allowing the company to set up shop here?

Paul Buchanan thinks not.

"I think sometimes in the quest to be market competitive the government sometimes overlooks the security concerns with the entrance of a foreign competitor such as a firm that has very direct ties to the Chinese State.

"There is a perception that China is now a market capitalist country. It is not. It is a state capitalist country run by a one-party authoritarian state.

"Nothing happens in their strategic sectors without the explicit permission and involvement of the Chinese State, specifically not in telecommunications.

"There's no such thing as pure private enterprise, particularly in the strategic sector, so the idea of Huawei having no State involvement, quite frankly, defies credulity.

"That's where the reports from the States and the Australians are very important because they detail the amount of capital the Chinese government has put into Huawei, and they detail the number of individuals who have come from Chinese intelligence to work as managers in Huawei.

"So are we doing enough vetting when it comes to this sort of business? Well, my answer would be no."

Dr Buchanan says now that Huawei is ensconced in New Zealand it would be very difficult to dislodge it as it would undermine this country's Free Trade Agreement with China.

But if the company's presence jeopardises our intelligence-sharing relationship with our closest allies it could force the government to have second thoughts about allowing it to remain here.

"The bottom line is that our security partners have these concerns, seem to have some reason to believe that they are an espionage threat and we're ignoring those concerns. John Key might want to take them on board."